Even as the UK stock market continues to reach record highs, chunky dividend yield opportunities haven’t disappeared.

It’s true that as share prices have raced ahead of payouts, indices like the FTSE 100 have seen their yields drop sharply for index investors. In fact, right now the FTSE 100 only offers a 3.12% payout compared to the 4% it historically provided.

However, when venturing beyond the main indices, there is actually a whole realm of hidden income opportunities. And right now, there are 71 London-listed shares offering 7% yields or higher.

That means anyone with £5,000 can instantly unlock a £350 passive income overnight with the right stocks. But of course, a high yield’s worthless if the underlying business can’t sustain it. So how can you tell?

What’s the secret to finding quality dividends?

Despite how many people tend to focus on yield, it’s actually not the most important number, and it’s often the one that lures people into making bad investment decisions.

Instead, the key is to focus on the free cash flow that supports it. After all, if a business isn’t generating enough excess cash flow, it will eventually have no choice but to cut payouts. Speedy Hire (LSE:SDY) shareholders learned this painful lesson the hard way last November when dividends were slashed by over 60%.

Of course, it’s also important not to fall into the trap of anchoring bias. This is where investors latch on to historical information without considering new data. And it’s how many end up missing out on spectacular comeback stories.

So does that mean investors should be giving Speedy Hire a second look?

A big yield on offer

Even after slashing its payout, Speedy Hire shares still offer a chunky 7.2% payout right now. The question is, is this still a yield trap?

As a quick reminder, the company rents tools and specialist equipment to construction, infrastructure and industrial customers. However, its revenue stream almost entirely originates from the UK. And right now, building activity in Britain is far from brilliant.

A combination of subdued demand alongside project delays has caused growth to stall. Even after adjusting prices, revenue across its 2026 fiscal year (ending in March) remained flat at £416.1m, with underlying pre-tax profits swinging into the red by £9.8m.

So far, those figures hardly scream dividend safety. But with turnaround efforts underway, could things be starting to improve?

Can earnings recover?

Speedy’s cash generation offers some encouragement. While the business is busy investing in new equipment as well as servicing its debts, free cash flow did nonetheless improve year on year, reaching £3m up from £0.8m.

Moreover, recently the group secured new long-term contracts, unlocking a £90m+ annual revenue opportunity. And management has already confirmed that in April and May, underlying earnings had already jumped 13%.

While it’s still early days, that’s definitely an encouraging sign of a potential comeback in the works. So does that make Speedy Hire and its 7.2% dividend yield worth buying today?

In my opinion, no. At least not yet. Two good months aren’t enough to confirm whether the business is back on track. But if the upward trajectory continues, then the bull case becomes a lot stronger. That’s why I’m keeping a close eye on this one. And it’s not the only stock that’s caught my eye…

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Zaven Boyrazian does not hold any positions in the companies mentioned.